I meant to get this post done a month ago, but as I’ve said here before — there will always be an inverse writing to working ratio; it’s been a busy month, so not much posting. Sales have picked up quite a bit, which leads me to think that at least some of our dismal fall was just a seasonal thing.
For the record, 2007, our 16th year in business, was a great year in sales volume for our brokerage area. We closed $167.2m, which is just a shade under our best year of 2005, when we closed 168.7m. However, for transaction “sides,” we were way down from our best year: 271 sides (representing either buyer or seller; when we act as “dual agent” it counts on my books as two sides), down from 283 in 2006 and 354 in that record year, 2005. I count every deal that we do, on and off market (for example, when we broker an unlisted deal), in my volume figures.
The gorgeous thing about increasing prices, is that despite the decrease in transaction sides, our gross commissions were nearly the highest they have ever been, due to the highest average sales price we’ve had: $619,845, up from $519,162 (2006), $476,744 (2005), and $428,186 (2004). It didn’t hurt the average that we listed and sold Zillow CEO Rich Barton’s former house, which closed in mid 2007 for $2.75m, as well as another half dozen $1.2m+ sales.
Does anyone else remember when $300,000 bought you just about anything you wanted in Seattle? Now a $1m sale isn’t that unusual, and the buyer and sellers of those homes aren’t always what you’d call rich by most conventional standards (income, wealth other than property). It’s just that the $1m home today is the $350,000 home of 1995. Way back in 1989, when I was a fresh faced 23 year old working at MacPherson’s Realtors in the U-District, one of our agents — Greg Haverfield — listed the first > $200,000 house in Wallingford. He was teased for his ambitious pricing, but it sold quickly. If memory serves, this is that house: 4101 Woodlawn Ave. N. By the way, it wasn’t the nicest house in Wallingford then…just the first one to sell for more than $200k.
Back to our stats. It’s also interesting to me that the percentage we take on each sale has been going down a bit these past few years (consolation: the real dollars on each commission have gone up). It’s not unusual to offer a client a discount off the “rack” rate when engaging in multiple deals (e.g. selling them a house then listing their existing home), but as a company we believe that there should be some common sense involved when we negotiate our fees. That is, when we sell a $5m house, we just maybe can charge a lower percentage than when we sell a $500,000 house. I know some agents say they “never” discount. I was talking to one notable broker who runs a team here in Seattle, probably doing about 75 transactions a year. I asked him if they ever discount. “No, NEVER!” Really, I said. What about when you sell your guy a $800,000 house, and in the same week, list his $550,000 property. “Well, sure, we’ll give something there.” What about when a client calls you from an open house, you’ve never seen it, you haven’t shown him a thing, and you write and close the deal? “Well, sure.” So you never discount, except almost every time??
Summary: 2007 was a good year. Dismal last quarter, but overall it was a productive year for our company.
2008: I think that we’re in for some big market driven challenges in 2008 and moving forward — things like increased market times, contingent deals, maybe some seller financing. But for anyone who has done this for more than a few years, or in different markets, you quickly realize that what we’ve had in Seattle between 2002 and 2007 is the exception. The rule is that we, as agents, have to WORK at our vocation. The era of just popping a sign in the yard and popping the deal, or managing the de facto auction, is gone. It’s time to sharpen the axe, put on the tool belt, pick your metaphor, and get to work.